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As Bitcoin (BTC) progressively approaches its present all-time high (ATH) of $124,128, enthusiasm appears to be re-emerging in the market. Nevertheless, new data from Binance reveals that BTC’s profits barely surpass the threats presented by the digital asset’s volatility.
Bitcoin Sustaining A Risk-Reward Equilibrium
In a CryptoQuant Quicktake post by contributor Arab Chain, recent data from Binance – the globe’s premier cryptocurrency exchange in terms of liquidity – indicates that BTC is presently sustaining a risk-reward equilibrium.
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Notably, the Sharpe-like ratio on Binance now sits at 0.18, a figure very near neutral ground. To clarify, a Sharpe-like ratio assesses how much return an investment produces in relation to the risk it undertakes, akin to the Sharpe ratio but generally employing adjusted benchmarks or risk calculations.
When the Sharpe-like ratio exceeds 0.5, investing in Bitcoin becomes appealing as the potential returns surpass the risks involved. In contrast, a negative value of the ratio deters investors from assuming risks, as volatility outstrips returns.
Throughout 2024, when the cryptocurrency market was predominantly frail and volatile, the Sharpe-like ratio dwelled mostly in negative territory. Conversely, the ratio surged to higher levels, indicating a robust uptrend, at the onset of 2025.
At present, the Bitcoin market is fluctuating between the two extremes – it is neither perilous nor in a vigorous uptrend. Importantly, the market seems to be in a state of balance and accumulation, as it hovers around $119,000. Arab Chain remarked:
The latest statistics reveal that the 30-day average return is merely 0.26%, underscoring that the market is not providing substantial gains; investors entering at this juncture are likely to experience only modest returns in comparison to risk. Meanwhile, the 30-day volatility is approximately 1.37%, indicating a normal, moderate degree of price fluctuation – not excessively tranquil but not alarmingly erratic either.
BTC Requires A Catalyst For Next Ascension
The CryptoQuant analyst further stated that the BTC market is presently anticipating a bullish catalyst or substantial inflows to prolong its upward trajectory. However, if the Sharpe-like ratio dips below zero once more, a price correction phase may ensue.
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Conversely, if the ratio remains above 0.5 for multiple days – along with a price breakout above the $120,000 to $122,000 range on robust volume – it would indicate a new upward trend for the leading cryptocurrency by market capitalization.
Recent on-chain insights suggest a possible rally setup for BTC. Importantly, the short-term holder (STH) spent output profit ratio (SOPR) recently rebounded slightly to 0.995.
That being said, Bitcoin must safeguard the crucial $90,000 support threshold to avert falling into a new bear market. At press time, BTC is trading at $118,788, with an increase of 1.3% over the past 24 hours.
Featured image from Unsplash, charts from CryptoQuant and TradingView.com
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